BTC Hits Record Undervaluation Amid ETF Outflows: Bitwise

Bitcoin (BTC) price fell to a year-to-date low of $74,555 on Monday, marking a 40% drawdown from its all-time high. The move coincided with $1.3 billion in net outflows from the global Bitcoin exchange-traded products (ETPs) last week.

This drawdown coincided with extreme bearish sentiment and low valuation metrics, but the silver lining could be analysts’ view that a potential asymmetric trade setup is in the works. 

Key takeaways:

• Bitcoin’s 2-year rolling MVRV z-score has fallen to its lowest level on record, signaling extreme undervaluation.

• Global Bitcoin ETPs saw $1.35 billion in weekly net outflows, led by $1.49 billion from US spot exchange-traded funds (ETFs). 

• Bitcoin’s daily RSI dropped into the 20 to 25 range, a zone that has preceded 10% rebounds in every instance since August 2023.

“Fire-sale” valuations emerge for Bitcoin as sentiment collapses: Bitwise

According to the Weekly Crypto Market Compass report by Bitwise, BTC’s dip has driven its two-year rolling Market-Value-to-Realized-Value (MVRV) z-score to the lowest level ever recorded, a metric linked with undervaluation, “signalling fire-sale valuations for Bitcoin”.

The MVRV z-score measures how far Bitcoin’s market value deviates from the aggregate cost basis of investors, adjusted for historical volatility.

Bitwise’s Cryptoasset Sentiment Index also dropped to levels last seen during the October 2023 liquidation crash, with only 2 of 15 tracked indicators remaining above their short-term trend.

Capital fund flows reinforced the bearish tone. Global crypto ETPs recorded $1.73 billion in net outflows last week, following $1.81 billion the week prior. Bitcoin products alone accounted for $1.35 billion, with the bulk driven by US spot BTC ETFs.

The Grayscale Bitcoin Trust and the iShares Bitcoin Trust posted $119 million and $947 million in weekly outflows, respectively.

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Bitcoin may find support near Monday’s lows

Bitcoin may be positioned for a short-term relief move after establishing a local low near $74,500 on Monday. The daily relative strength index (RSI) dropped into the 20 to 25 range, a zone that has preceded roughly 10% in price rebounds in every instance since August 2023, with June 2024 being the only delayed exception.

The lower time frame data supports the possibility of a rebound and the spot cumulative volume delta (CVD) on Binance and Coinbase has turned positive as BTC rebounded toward $79,300.

The rising spot CVD indicates net aggressive buying, while the flat open interest and negative aggregated funding rates suggest the move is driven by spot demand rather than leveraged longs, reducing immediate liquidation risk.

BTC long liquidations worth over $1.8 billion last week support this view, and the current liquidity is on the upside, with over $3 billion in cumulative short positions at risk of liquidation near $85,000.

Crypto trader ‘exitpump’ echoed this setup, noting a bullish spot CVD divergence across major exchanges.

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